Inside the world of business
Almunia must match words to deeds on bank guarantee
WHEN JOAQUIN Almunia spoke to Arthur Beesley, this paper’s European Correspondent earlier this week, the competition commissioner had no idea how pertinent his comments would be.
His rather academic assertions on the foolishness of the 2008 blanket bank guarantee suddenly became very relevant when the Minister for Finance announced on Wednesday in Washington that he was going to try and undo some of the damage done by the guarantee.
Mr Almunia – whose comments were only published on Friday – suddenly found himself in the position of having to match words with deeds. It is hardly a tenable position for the commissioner to oppose an attempt to bail in Anglo Irish Bank’s senior bondholders when he has gone on the record that – arguably not in so many words – the guarantee that protects them puts an unfair burden on the Irish taxpayer. Yesterday he kicked for touch during his visit to Dublin, but the issue shows no sign of going away.
The question will no doubt continue to simmer over the summer as events unfold in Greece. Whatever the outcome, there is almost certain to be a revisiting of the Irish bailout to try and implement yet another firebreak between a problem member state and the rest of the euro zone.
It is close to common case that Ireland has taken ownership of its adjustment programme and is implementing it. The problem remains the sheer size of our debt, most of it banking-related.
Reducing that debt is the priority and bailing in senior bondholders of the defunct banks is an obvious and – above all – fair way to do it. Hopefully Ireland will be able to count on Mr Almunia’s support when the time comes.
Cash is king at Irish Stock Exchange
IT IS telling when the company that operates the Irish Stock Exchange switches all of its investments out of equities and bonds and into good, old fashioned cash.
This is precisely what the Irish Stock Exchange Ltd did last year, according to accounts just filed.
Its investment mandate is managed by stockbroker Davy and following a review last year, the switch to cash was made.
It might not be sexy but its safe and the returns are predictable.
Just €1.1 million of its portfolio was in non-cash form at the end of 2009 compared with €17 million in the previous year.
The switch wasn’t without pain. The exchange booked a loss on its financial investments of €161,000 last year compared with a surplus of €1.6 million in 2009.
The stockbroking elite who populate the exchange’s board of directors obviously concluded that there would be long-term gain from this short-term pain.
Some might argue that they waited too long to make the switch.
Whatever about that, the timing of this move is surely a strong signal for all of us.
PCH may become Irish tech superstar
IF, AS it is widely speculated, Liam Casey’s PCH International floats on the Hong Kong Stock Exchange in the coming months it will be a major landmark for a company that could yet become the most successful technology company Ireland has ever spawned.
It’s not that long ago that many in the industry were scratching their heads at what the Cork entrepreneur was doing in China. But the picture became clearer this week with PCH’s acquisition of Irish firm TNS Distribution in a deal that could be worth as much as €21 million.
PCH now has the capability to design, manufacture and ship consumer electronics from its China base directly to consumers all over the world. It does so for some of the biggest brand names in the world, although Casey has always refused to confirm who he works for. With the TNS purchase it can now also deliver those products to retailers and resellers across Europe.
For start-ups, or even established firms, this means they can effectively come up with a product idea and all they have to do is market it and collect the cash. PCH will refine the design, create it and get it to the consumers.
Although TNS is Europe-focused, Casey was clear this week that he would like to recreate the model globally. He’s adamant that part of the business is ideally located in Ireland and could potentially deliver significant jobs.
PCH has been on a rapid growth curve. Revenues last year hit $413 million (€289 million), up from $153 million in 2009. Profits also jumped from $1.5 million to $16 million.
Although Casey insists the company is looking at all its funding options – another $30 million in venture capital earlier this month – his backers will be eager to cash in on the current round of successful tech IPOs. If PCH does file a prospectus for a flotation we should get the full picture of Casey’s quiet success.
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